How are the wallstreetbets guys so successful?

smallfil said:
When you say OTM options, those are lottery plays. I trade options as a buyer and avoid those. Sure you can get lucky and hit a homerun but, how many times do you strike out? To hit one of those, big money makers, you would probably, lose 80-90% or 8 or 9 trades out of ten. Can you handle such losses? You know who I am impressed with? The hedge funds, banks and brokers. When you have a win rate in the 80-90% you certainly, know what the hell you are doing. That said, hedge funds, banks, brokers are the sharks of Wall Street. They have the capital in the hundreds of millions and billions that we retail traders do not have. You and I are mere sardines. Do not be one, like the ET trolls who think they are a whale when, they are a sardine. The Wall Street sharks will eat you every time!
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but as victor niederhoffer learned the hard way, that loss on the 10th time can really bite you in the ass
 
tradelosses said:
but as victor niederhoffer learned the hard way, that loss on the 10th time can really bite you in the ass
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Most of them do not make it to the 10th trade. Imagine, if these guys have lost 90% of their monies, what would stop them from going all in the very next trade? Wall Street sharks licking their chops ready to chomp on their next meal.
 
Almost every forum is the same in that regard. If you pay closer attention to the posters who are most vocal during a pronounced move, you will find they usually disappear when the opposite move appears and vice-versa. So yes, like everyone else says it's a reporting bias.

If you are easily misled or new to this sort of thing, you will come away with the impression that "everyone is making money" but it's basic human nature to only want to announce one's wins while pretending that one never loses. Sadly, this gives a bunch of newbie traders a false impression.
 
Hivey said:
They are buying far OTM put/call tails in the hopes off making a big bang. They will have more losers than winners, but hope the winner will offset all losers.

As others are saying, the actual % of people making these outrageous returns is relatively small as you won't see them post about it. Some get lucky and hit the jackpot in one of their first attempts, whereas others get broke even before they hit their big winner.

What is the case though, is that the delta between realized vol and implied vol has decreased over the years, i.e. tail premiums are lower (I expect as there are more option sellers these days vs say 10 years ago), making this a more attractive strategy.
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This is 100% spot on. All i'd like to add is that theyre going to get wiped out once IV starts dropping and their directional delta bets are wrong. Sideways market will smoke a lot of these guys and they wont know what hit them.
 
Echoing everyone here. I'd like to add that proof of their losses comes from their account sizes which are typically 5-20k. If they make such huge returns, why are their accounts still almost nonexistent. If they'd be continuously successful, I'm sure they'd like to post their YOLO trades with capitalization of 1mm and up. More likely they blow 10 small accounts over a long period and post the one that really worked out well.
 
zghorner said:
for every successful WSB poster their are 10,000 that are going broke. But they have balls and take risks which IMO is essential to success in any form.
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There's risk taking and "YOLO" gambling. They practice the latter. Few want to actually trade themselves up with more sane risk parameters because that's not exciting. They blame boomers for not having money etc. Quite hilarious.
 
Put $200K on a long $TSLA straddle/strangle while IV is low.

IV explodes.

$TSLA moves huge. One leg goes to 0, other leg goes to infinity.

That's the most recent guy.

You need to repeat these moves over and over starting from a smaller account and get it right more than wrong. There is most definitely skill involved.
 
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